Oct 132017
 
 October 13, 2017  Posted by at 9:04 am Finance Tagged with: , , , , , , , , ,  3 Responses »
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Joan Miro Dancer 1925

 

The Shoeshine Boy Moment For FANG And Friends (DR)
Valuations Are Expensive (Lance Roberts)
Central Banks Have Effectively Manufactured The World’s Biggest Economy (BBG)
ECB to Consider Cutting QE Purchases in Half Next Year (BBG)
Boeing Passenger Jets Have Falsely Certified Kobe Steel Products (R.)
Kobe Steel Scandal Expands Into Core Business Overseas (BBG)
Distressed Investors Buying Houston Homes for 40 Cents on the Dollar (BBG)
Tesla Plays Auto Game By Silicon Valley Rules (DN)
What Powers America (CB)
Greek Civil Servants’ Wages 38% Higher Than Private Sector Staff (K.)
US Obesity Rates Hit New Records: 39.6% of Adults Now Obese (AFP)
Antibiotic Resistance Could Spell End Of Modern Medicine (G.)
Penguin Disaster As Only Two Chicks Survive From Colony Of 40,000 (G.)

 

 

My guess is that once one of them starts falling, the others will domino right along.

The Shoeshine Boy Moment For FANG And Friends (DR)

In early March 2009, the current bull market began in the same way that most of the great bull runs in history have, at a moment when investors were terrified to own stocks. Since then it has been nothing but good times. We are now eight and a half years into this bull market making it the second longest in history. This party has been fun. And for a handful of the most popular stocks, fun doesn’t do it justice. The party has been positively off the chains. The stocks that I’m talking about are the FANG (Facebook, Amazon, Netflix and Google) stocks plus a few of their friends (Tesla, Alibaba and others). These stocks have vastly outperformed the market during this bull-run. Now this is where I become a bit of a party-pooper.

Where Joseph Kennedy Sr. had his shoeshine boy moment for the market in 1929, I believe that a similar warning sign arrived for FANG and friends this summer. Remember, they don’t ring a bell at the top but there are signs. This I believe is a big one… The demand for these stocks has become so high that specific ETFs and dedicated index funds are being launched that are comprised only of FANG and friends. Not just an ETF or index fund, but multiple versions. That latest is called the NYSE FANG+ index. It includes 10 highly liquid stocks that are considered innovators across tech and internet/media companies. It is marketed as a benchmark of today’s tech giants. That may be true, but it is also a benchmark of some of the most expensive stocks in the entire S&P 500. Here are its components:

Yes, I’d love to go back in history and own this group of stocks three years ago. But would I want to own them after an already incredible run? No! As a group these stocks are frighteningly expensive today. That is generally what happens when stocks go up that fast, they become much less attractively valued.

Read more …

Another great effort by Lance.

Valuations Are Expensive (Lance Roberts)

[..] the repetitive cycle of monetary policy: • Using monetary policy to drag forward future consumption leaves a larger void in the future that must be continually refilled. • Monetary policy does not create self-sustaining economic growth and therefore requires ever larger amounts of monetary policy to maintain the same level of activity. • The filling of the “gap” between fundamentals and reality leads to consumer contraction and ultimately a recession as economic activity recedes. • Job losses rise, wealth effect diminishes and real wealth is destroyed. • Middle class shrinks further. • Central banks act to provide more liquidity to offset recessionary drag and restart economic growth by dragging forward future consumption. •Wash, Rinse, Repeat.

If you don’t believe me, here is the evidence. The stock market has returned more than 60% since 2007 peak, which is more than three times the growth in corporate sales growth and 30% more than GDP. The all-time highs in the stock market have been driven by the $4.5 trillion increase in the Fed’s balance sheet, hundreds of billions in stock buybacks, PE expansion, and ZIRP.

It is critical to remember the stock market is NOT the economy. The stock market should be reflective of underlying economic growth which drives actual revenue growth. Furthermore, GDP growth and stock returns are not highly correlated. In fact, some analysis suggests that they are negatively correlated and perhaps fairly strongly so (-0.40). However, in the meantime, the promise of a continued bull market is very enticing as the “fear of missing out” overrides the “fear of loss.” This brings us back to Jack Bogle and the importance of valuations which are often dismissed in the short-term because there is not an immediate impact on price returns. Valuations, by their very nature, are HORRIBLE predictors of 12-month returns should not be used in any strategy that has such a focus. However, in the longer term, valuations are strong predictors of expected returns.

[..] I have also previously modified Shiller’s CAPE to make it more sensitive to current market dynamics. “The need to smooth earnings volatility is necessary to get a better understanding of what the underlying trend of valuations actually is. For investor’s, periods of ‘valuation expansion’ are where the bulk of the gains in the financial markets have been made over the last 116 years. History shows, that during periods of ‘valuation compression’ returns are more muted and volatile. Therefore, in order to compensate for the potential ‘duration mismatch’ of a faster moving market environment, I recalculated the CAPE ratio using a 5-year average as shown in the chart below.”

To get a better understanding of where valuations are currently relative to past history, we can look at the deviation between current valuation levels and the long-term average going back to 1900.

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“Central Banks’ Return to Normalcy Is Nothing But a Charade”

Central Banks Have Effectively Manufactured The World’s Biggest Economy (BBG)

The Federal Reserve keeps talking about a “return to normal” in monetary policy. The media must buy into it, because it keeps repeating the phrase. Many investors buy into it, too. After all, it is the high and mighty Fed speaking. This “normal” is defined by interest rates, but interest rates are defined by the economics that surround them. Interest rates do not exist in a vacuum. But since we are in an economic environment never before seen in history, where data compiled by Bloomberg show that central banks have amassed $21.5 trillion in assets, how can there possibly be any notion of “normal?” Nothing in history supports the claim. Without a history, “normal” is a meaningless term. Think about it: In response to the financial crisis, central banks have essentially manufactured in just nine years an economy that is bigger than the gross domestic products of either the U.S. or China.

I am more than willing to recognize the accomplishment, but to call it “normal” is either a ruse or the height of foolishness. There is nothing “normal” about it. Some may say it is the “crown of creation,” and a case can be made for this argument, but it is not a crown that was ever seen before. This is why, when assessing financial markets, I keep pointing at the money. It is the giant amount of manufactured capital that is holding interest rates down, pushing equities up and compressing all risk assets against their sovereign benchmarks. It isn’t inflation or housing data or wages or any other piece of data that can be singled out. Those are, by comparison, flyspecks in the wind. Simply put, all that money has created demand that outstrips the current supply in bonds, in equities, in stock price-to-earnings multiples, in historical risk valuations and in credit assets.

Therefore, the economic environment that underlies asset pricing is, in fact, distorted. The Fed’s claim of some sort of “normalcy” is a charade. Fed Chair Janet Yellen can say it, and so can Fed governors and presidents, but there is not one grain of truth in the telling. It is nothing more than mumbo-jumbo because they do not wish you to recognize what is actually happening. They have taken over markets and now totally control and dominate them, regardless of the usual day-to-day antics.

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More ‘normalcy’.

ECB to Consider Cutting QE Purchases in Half Next Year (BBG)

ECB officials are considering cutting their monthly bond buying by at least half starting in January and keeping their program active for at least nine months, according to officials familiar with the debate. Reducing quantitative easing to €30 billion ($36 billion) a month from the current pace of €60 billion is a feasible option, said the officials, who asked not to be identified because the deliberations are private. While the central bank’s governors are split on the need to identify an end date for purchases, a pledge to keep buying bonds until September – with the proviso that it could be extended if needed – may offer grounds for compromise, they said. Policy makers led by President Mario Draghi are becoming increasingly confident that ECB policy makers will on Oct. 26 agree to the specifics of how much debt the euro-area’s central banks will buy in the coming year.

After more than 2 1/2 years of trying to revive the region’s economy through bond purchases, some governors see the recent period of robust growth as a reason to rein in the support. Others are concerned that inflation remains too weak. Any changes to the sum and time frame of quantitative easing would still fit into the ECB’s present guidance on monetary policy, which commits the ECB to promise “a sustained adjustment in the path of inflation consistent with its inflation aim.” It also pledges that if “the outlook becomes less favorable, or if financial conditions become inconsistent with further progress toward a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the program in terms of size and/or duration.”

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The Japanese government better act fast. Kobe requires controlled demolition.

And this sort of comment needs to stop: “Boeing does not as yet consider the issue a safety problem..”

Of course it’s safety problem. Or are we to believe the safety standards never amounted to anything?

Boeing Passenger Jets Have Falsely Certified Kobe Steel Products (R.)

Boeing, the world’s biggest maker of passenger jets, has used Kobe Steel products that include those falsely certified by the Japanese company, a source with knowledge of the matter told Reuters. Boeing does not as yet consider the issue a safety problem, the source stressed, but the revelation may raise compensation costs for the Japanese company, which is embroiled in a widening scandal over the false certification of the strength and durability of components supplied to hundreds of companies. The U.S. airline maker is carrying out a survey of aircraft to ascertain the extent and type of Kobe Steel components in its planes and will share the results with airline customers, said the source who has knowledge of the investigation.

Even if the falsely certified parts do not affect safety, given the intense public scrutiny that airlines operate under they may opt to replace suspect parts rather than face any backlash over concerns about safety. Any large-scale program to remove those components, even during scheduled aircraft maintenance, could prove costly for Kobe Steel if it has to foot the bill. Kobe Steel’s CEO, Hiroya Kawasaki, on Thursday said his company’s credibility was at “zero.” The company, he said, is examining possible data falsification going back 10 years, but does not expect to see recalls of cars or airplanes for now.. Also in the U.S., General Motors said it is checking whether its cars contain falsely certified components from Kobe Steel, joining Toyota and around 200 other firms that have received falsely certified parts from the company.

Boeing does not buy products such as aluminum composites, used in aircraft because of their light weight, directly from Kobe Steel. Its key Japanese suppliers, including Mitsubishi Heavy Industries, Kawasaki Heavy Industries and Subaru, however, do. These Japanese companies are key parts of Boeing’s global supply chain, building one fifth of its 777 jetliner and 35% of its carbon composite 787 Dreamliner.

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This is getting bigger by the minute.

“..the company holds roughly half of the global market share for the wires used in valve springs of auto engines

Kobe Steel Scandal Expands Into Core Business Overseas (BBG)

Kobe Steel’s fake data scandal expanded to its core business after the company admitted “inappropriate actions” related to steel wire produced overseas, triggering a fresh collapse in its shares and heightened speculation that the steelmaker may get broken up. Customers have been informed about the issue, which has been resolved, Tokyo-based spokeswoman Eimi Hamano said by phone, declining to provide details. Kobe Steel falsified quality certification data for steel wire used in auto engines and to strengthen tires, the Nikkei newspaper reported Friday. Kobe’s admission of misconduct in its steel business, which accounts for about a third of revenue, ratchets up the pressure on Japan’s third-biggest steelmaker.

The company’s disclosures had up until now dealt with aluminum, copper and iron ore products used in everything from cars to computer hard drives to Japan’s iconic bullet trains, although there haven’t been any reports of products being recalled or safety concerns raised. The deepening scandal “suggests that this is company culture, not just the actions of a few rogue employees,” Alexander Robert Medd, managing director at Bucephalus Research in Hong Kong, said by email. The question to be resolved is “were they trying to save money or just unable to produce the right spec in the right quantities,” he said. Kobe’s shares have plunged 42% this week, including a 9.1% drop on Friday, after it revealed on Sunday that it had fudged data on the strength and durability of metals supplied to as many as 200 customers around the world, including Toyota, General Motors and space rocket-maker Mitsubishi Heavy Industries.

[..] SMBC Nikko Securities said in a note the new revelations around steel wires could be “quite negative” for Kobe Steel’s creditworthiness as the company holds roughly half of the global market share for the wires used in valve springs of auto engines. If doubts arose over the safety of the wires, it could “shake the foundation” of the company, according to chief credit analyst Takayuki Atake.

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“The whole thing makes me feel like there’s a bunch of vultures sitting on my back fence..”

Distressed Investors Buying Houston Homes for 40 Cents on the Dollar (BBG)

Bryan Schild drives through the byways of Houston looking for what could be the investment opportunity of a lifetime: homes selling for as little as 40¢ on the dollar. “We Pay Cash For Flooded Homes $$$$$$$$ Don’t fix it, sell it. Quick close,” read the signs piled in the back seat of his Ford pickup. Schild stops by a ranch-style house where 74-year-old Paul Matlock lives with his wife, disabled from multiple sclerosis. Matlock is desperate to leave and is considering Schild’s offer of $120,000—half the home’s value three weeks earlier. A half-dozen other investors have made offers, one as low as $55,000. “The whole thing makes me feel like there’s a bunch of vultures sitting on my back fence,” Matlock says. “They’re waiting for the dead body to fall over.”

It’s axiomatic on Wall Street that the time to buy is when fear overtakes greed—when blood (or, in this case, water) is in the streets. Now some are eyeing the billions of dollars in hurricane-ravaged property in Texas and Florida and deciding it may be the time to take out their checkbooks. Investors such as Schild figure they can buy low, either fix up and flip the houses or rent them out for several years, and unload them later, doubling their money or more. Those kinds of bets have often paid off. Buyers who snapped up co-ops and office towers when New York was near bankruptcy in the 1970s made a killing. More recently, companies including Blackstone and other marquee names bought foreclosed homes after the 2008 financial crisis and are sitting on billions in potential gains.

The cycle begins with small-time investors such as Schild, who’s bought more than 30 waterlogged houses for an average $175,000 apiece. Then Wall Street swoops in. Gary Beasley, former CEO of Waypoint Homes, also sees an opportunity. He’s pitching private equity firms and pension funds on the potential profit in buying flooded homes, repairing them, and renting them back to homeowners. Bain Capital and billionaire Marc Benioff, co-founder of Salesforce.com, are backing Beasley’s two-year-old company, Roofstock. It runs a website where investors can buy and sell single-family rental properties. Beasley thinks owner-occupants may be interested in selling there, too, and that flooded neighborhoods are the Next Big Thing. “It’s much like the housing crisis, when the institutional guys came in to buy homes nobody wanted,” he says. Like other investors, Beasley and Schild view themselves as helping homeowners to move on and Houston to rebuild.

Read more …

Will Musk take Silicon Valley down with him?

Tesla Plays Auto Game By Silicon Valley Rules (DN)

Lest there be any doubt, the electrified race for supremacy in self-driving cars is being played by Silicon Valley rules. How do we know this? By Tesla Chairman Elon Musk’s recognition that his long-awaited Model 3 compact is “in production hell,” that it’s complicated by “bottlenecks” and by confirmation that parts of the cars are being “hand-built.” This amazing accomplishment is being greeted, well, differently by investors than it would if, say, General Motors Chairman Mary Barra copped to the same kind of chaos with its electric Chevrolet Bolt … or just about any other eagerly anticipated model in its lineup. Tesla mostly gets a pass, as it does for losing money on every car it produces. The nearly 4% slide in its shares Monday, the first trading day after The Wall Street Journal reported the messy Model 3 launch, has since recouped most of the loss, judging by the market close Wednesday.

To free “resources to fix Model 3 bottlenecks” and increase battery production to help hurricane-ravaged Puerto Rico, Musk tweeted that Tesla’s anticipated demonstration of its self-driving truck would be delayed until Nov. 16. Detroit (and its foreign-owned rivals) would get crucified for a similar mess. Analysts, the news media and, especially, investors would show scant tolerance for misses of that magnitude from traditional auto industry players — and all of them would demand answers. Tesla? Not so much. Never mind that Musk, the automotive wunderkind, might risk missing what Barclays Research calls the “iPhone moment” for the Model 3, Tesla’s long-awaited entry into the volume-priced electric car segment. You know, the segment already occupied by GM’s Chevy Bolt, Nissan’s Leaf and a slew of coming electric entrants from global automakers.

As a rule, they don’t botch production launches with the same aplomb as Musk’s hand-built production hell. They also have broader distribution networks under existing state franchise laws; more disciplined production systems with longer lead times to ensure more consistent quality at launch; and greater transparency with investors, analysts and the news media. This will be fascinating to watch. Tesla’s Model 3 is one of the most highly anticipated car launches in a long time. It’s supposed to be sheet metal and electric powertrain proof that Silicon Valley innovation can beat Detroit and Stuttgart, Tokyo and Seoul at their own game.

Read more …

Click the link to see the whole thing.

What Powers America (CB)

The US electricity system is often described as the world’s largest machine. It is also incredibly diverse, reflecting the policy preferences, needs and available natural resources of each state. Carbon Brief has plotted the nation’s power stations in an interactive map to show how and where the US generates electricity. A few key messages can be gleaned from the map and associated data interactives below: • The US electricity system has been changing rapidly over the past decade. This reflects not only federal policy, but also technologies, geographies, markets and state mandates. •The average US coal plant is 40 years old and runs half the time. Some 15% are at least 50 years old, against an average retirement age of 52. • Planned new power plants are almost exclusively gas, wind or solar.

Supplying electricity to a nation’s homes, business and industry is an almost uniquely challenging enterprise. For now, electrical energy is either expensive or inconvenient to store, meaning supply and demand must be balanced in real time. It is also easier to generate power close to home than to transport it over long distances. The way electricity is generated fundamentally depends on the fuels and technologies available. The march of progress means this mix is changing – but natural resources and geographies are fixed. Moreover, US states have broad powers to influence the electricity systems within their borders. Putting the US electricity system on a map offers visual confirmation of how important these factors are. Why is solar so prevalent in North Carolina, for example? Or coal in West Virginia?

You can use Carbon Brief’s interactive map to view all the power plants in the US and their relative electricity generating capacities, which are proportional to the size of the bubbles. The dynamic chart in the sidebar summarises the makeup of the capacity mix. It’s important to note that the map and related charts, below, are based on electrical generating capacity. The electricity generated each year by each unit varies according to its load factor (average output of a power station, relative to its installed capacity). US wind has a load factor of around 35% while solar is around 27%. These are lower load factors than for nuclear at around 90%. Coal and gas can, in theory, have similarly high load factors, but in practice both are at around 50% in the US.

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Article gets numbers mixed up, but one thing is certain: Greeks make very little money compared to cost of living.

Greek Civil Servants’ Wages 38% Higher Than Private Sector Staff (K.)

Despite years of austerity policies, Greek civil servants remain significantly better paid than private sector wages, with their average wages 38% higher than their counterparts in the private sector, according to the Hellenic Federation of Enterprises (SEV). The average net monthly wage in the public sector is €1,075 compared to €777 in the private sector, according to figures made public in SEV’s weekly bulletin which underlined that the gap between the two is widening rather than closing. In the first half of this year, the average wage in the public sector rose marginally – by 0.1% – compared to a drop of 1.3% for private sector salaries, according to SEV’s analysis, which concluded that private sector workers saw their wages shaved by about €10 a month over that period.

In a related development, a report conducted by the civil servants’ union ADEDY reported an increase in permanent staff in the Greek civil service over the past year. An additional 1,293 staff were hired between August 2016 and last August, bringing the total number to 566,022, according to the report. Another finding was that most Greek civil servants – 80% of the total – take home a net monthly salary of less than €1,300. Half earn up to €1,000 a month, 44% take home between €1,000 and €1,500 and 3.6% net between €1,500 and €2,100, according to the report. Last month, SEV painted a dire picture of the state of the Greek pension system, which it described as running on empty, while warning that the country’s beleaguered private sector has taken on a disproportionate share of the burden to support pensioners and the public sector.

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Easy to figure out what this will mean to health care. The richest country in the world kills its people for profit.

US Obesity Rates Hit New Records: 39.6% of Adults Now Obese (AFP)

The rate of obesity in the United States has reached a new high, at 39.6% of adults, according to US government data released Friday. Health experts are concerned about obesity because it is associated with a number of life-threatening health conditions, including heart disease, stroke, diabetes and certain kinds of cancer. The adult obesity rate in the United States has risen steadily since 1999, when 30.5% of adults were obese. “From 1999–2000 through 2015–2016, a significantly increasing trend in obesity was observed in both adults and youth,” said the report, based on a nationally representative sample of the population, and issued by the National Center for Health Statistics.

“The observed change in prevalence between 2013–2014 and 2015–2016, however, was not significant among both adults and youth.” Its previous report for 2013 to 2014 found that 37.7% of adults were obese. Researchers said the difference between the current and last report is not statistically significant because it falls within the margin of error of the estimate. Adult obesity is defined as having a body mass index (BMI) of 30 or higher. Among youths aged two to 19, 18.5% are obese, the report said. The rate of youth obesity was 13.9% in 1999.

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Another example of killing people for profit.

Antibiotic Resistance Could Spell End Of Modern Medicine (G.)

England’s chief medical officer has repeated her warning of a “post-antibiotic apocalypse” as she urged world leaders to address the growing threat of antibiotic resistance. Prof Dame Sally Davies said that if antibiotics lose their effectiveness it would spell “the end of modern medicine”. Without the drugs used to fight infections, common medical interventions such as caesarean sections, cancer treatments and hip replacements would become incredibly risky and transplant medicine would be a thing of the past, she said. “We really are facing – if we don’t take action now – a dreadful post-antibiotic apocalypse. I don’t want to say to my children that I didn’t do my best to protect them and their children,” Davies said.

Health experts have previously said resistance to antimicrobial drugs could cause a bigger threat to mankind than cancer. In recent years, the UK has led a drive to raise global awareness of the threat posed to modern medicine by antimicrobial resistance (AMR). Each year about 700,000 people around the world die due to drug-resistant infections including tuberculosis, HIV and malaria. If no action is taken, it has been estimated that drug-resistant infections will kill 10 million people a year by 2050. The UK government and the Wellcome Trust, along with others, have organised a call to action meeting for health officials from around the world. At the meeting in Berlin, the government will announce a new project that will map the spread of death and disease caused by drug-resistant superbugs.

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Too sad for words.

Penguin Disaster As Only Two Chicks Survive From Colony Of 40,000 (G.)

A colony of about 40,000 Adélie penguins in Antarctica has suffered a “catastrophic breeding event” – all but two chicks have died of starvation this year. It is the second time in just four years that such devastation – not previously seen in more than 50 years of observation – has been wrought on the population. The finding has prompted urgent calls for the establishment of a marine protected area in East Antarctica, at next week’s meeting of 24 nations and the European Union at the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR) in Hobart. In the colony of about 18,000 breeding penguin pairs on Petrels Island, French scientists discovered just two surviving chicks at the start of the year. Thousands of starved chicks and unhatched eggs were found across the island in the region called Adélie Land (“Terre Adélie”).

The colony had experienced a similar event in 2013, when no chicks survived. In a paper about that event, a group of researchers, led by Yan Ropert-Coudert from France’s National Centre for Scientific Research, said it had been caused by a record amount of summer sea ice and an “unprecedented rainy episode”. The unusual extent of sea ice meant the penguins had to travel an extra 100km to forage for food. And the rainy weather left the chicks, which have poor waterproofing, wet and unable to keep warm. This year’s event has also been attributed to an unusually large amount of sea ice. Overall, Antarctica has had a record low amount of summer sea ice, but the area around the colony has been an exception.

Ropert-Coudert said the region had been severely affected by the break-up of the Mertz glacier tongue in 2010, when a piece of ice almost the size of Luxembourg – about 80 km long and 40km wide – broke off. That event, which occurred about 250km from Petrels Island, had a big impact on ocean currents and ice formation in the region. “The Mertz glacier impact on the region sets the scene in 2010 and when unusual meteorological events, driven by large climatic variations, hit in some years this leads to massive failures,” Ropert-Coudert told the Guardian. “In other words, there may still be years when the breeding will be OK, or even good for this colony, but the scene is set for massive impacts to hit on a more or less regular basis.”

Read more …

Sep 162017
 
 September 16, 2017  Posted by at 8:40 am Finance Tagged with: , , , , , , , , ,  3 Responses »
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Pablo Picasso Garcon à la Pipe 1905

 

To Hell In A Bucket: America Is Going Broke At Mach 30 (Gordon)
Down $20 Billion, Boeing Stuffs Pension Fund With Its Own Shares (BBG)
Toys ‘R’ Us Mulls Chapter 11 Bankruptcy Filing (R.)
Bitcoin Needs To Be Worth $1,000,000 To Be A Legitimate Currency (MW)
Hillary Happened (Jeffrey St. Clair)
Trump And The Democrats: What’s Next: A Deal With Bernie? (Salon)
The OODA Loop Of Trump’s Insurgency Has Been Smashed (GG)
A Flaw In US Foreign Policy That No One Wants To Talk About (TAM)
This Isn’t Your Great-Grandad’s America (Jim Kunstler)
Police In Catalonia Hunt For Hidden Ballot Boxes In Bid To Foil Referendum (R.)
Spanish State Poised To Seize Catalan Finances (BBC)
New York City Is Within Hurricane Jose’s 5-Day “Cone Of Uncertainty” (ZH)

 

 

$34,880 of new debt per second..

To Hell In A Bucket: America Is Going Broke At Mach 30 (Gordon)

“You know as well I do how this crazy debt based fiat money system works. The debt must perpetually increase or the whole financial system breaks down. The best we can hope for is that the ongoing currency debasement merely leads to a subtle erosion of living standards. That’s the best-case scenario. “But, again, no one except maybe a handful of your readers’ gives a rip about the federal debt. Plus, if you’re gonna keep writing about it you need to use better terminology. “The federal debt has grown at such a rapid rate that standard dollar units no longer capture what’s going on. The debt numbers are so large it is difficult to distinguish between hundreds of billions and tens of trillions of dollars. “For better perspective, you need to describe the debt growth in astronomical terms.

You see, astronomers use light years to adjust for large distances. A light year, as its name suggests, is the distance light travels in one year. One light year converts to light traveling about 5.87 trillion miles per year, excluding leap year of course. “You noted that since President Obama took office in early 2009, at about the time the American Recovery and Reinvestment Act was passed, the U.S. federal debt has increased from $10.6 trillion to nearly $20 trillion. Well, you were wrong. “In the several days since you wrote that article, did you see the federal debt jumped to over $20.1 trillion? “Apparently, after Congress suspended the debt limit last Friday, the Treasury went ahead and reported the $300 billion of off balance spending they’d run up over the last six months since hitting the debt ceiling in March.

This is what Treasury Secretary Mnuchin meant by resorting to ‘extraordinary measures’ to keep the government humming. Sounds like Enron accounting to us. “Anywho, over the last 104 months the federal debt has increased by $9.5 trillion – or at an annual rate of about $1.1 trillion. This equals a rate of increase that’s nearly 20% the speed of light. This also pencil’s out to $34,880 of new debt per second. Are you starting to grasp the enormity? “Still, if the speed of light example doesn’t do it for you, how about the speed of sound? When Chuck Yeager first outran sound he reached what was called Mach 1. That equals 767 miles per hour – or 1,125 feet per second. “So, at $34,880 of new debt per second, the federal government is running up the debt at a speed that’s over Mach 30. Yes, things have really gotten out of control!

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I’m sure it’s entirely legal.

Down $20 Billion, Boeing Stuffs Pension Fund With Its Own Shares (BBG)

Like so many companies in America, Boeing has largely neglected the gaping deficit in its employee pension as it doled out lavish rewards to shareholders. What’s raising eyebrows is how it plans to shore up the retirement plan. Last month, Boeing made its largest pension contribution in over a decade. But rather than put up cash and lock in the funding, the planemaker transferred $3.5 billion of its own shares, including those it bought back in years past. (The administrator says it expects to sell them over the coming year.) It’s a bold move, and one cheered by many on Wall Street. Yet to pension experts, it isn’t worth the risk. After a record-setting, 58% rally this year, Boeing is betting it can keep producing the kind of earnings that push shares higher. If all goes well, not only will the pension benefit, but Boeing says it will be able to forgo contributions for the next four years.

But if anything goes awry, the $57 billion pension – which covers a majority of its workers and retirees – could easily end up worse off than before. “It’s an irresponsible thing to do certainly from the perspective of the plan participants,” said Daniel Bergstresser, a finance professor at the Brandeis International Business School. “Ideally, you would like to put assets in the pension plan that won’t fall in value at exactly the same time that the company is suffering.” Under CEO Dennis Muilenburg, Boeing’s pension shortfall has widened as the Chicago-based company stepped up share buybacks. The $20 billion gap is now wider than any S&P 500 company except General Electric. And relative to earnings, Boeing shares are already trading close to the highest levels in a decade, a sign there might be more downside than upside.

[..] At the end of 2016, its pension had $57 billion in assets and $77 billion in obligations – a funding ratio of 74%, data compiled by Bloomberg show. Boeing froze pensions for Seattle-area Machinist union members last year under a hard-fought contract amendment. It also switched non-union workers to a defined contribution plan. And the stock transfer last month, combined with a planned $500 million cash payment this year, would be equal to all the company’s contributions during the previous five years. Nevertheless, it still leaves Boeing with roughly $15 billion in unfunded pension liabilities, although the shortfall should gradually shrink over the next four years, according to Sanford C. Bernstein. To be clear, Boeing has the money. In the past three years, the company generated enough excess cash to buy back $30 billion of its own shares.

But using equity instead of cash does have its advantages. It allows Boeing to conserve its free cash flow – a key metric for investors – by transferring Treasury shares that were repurchased at far lower values than today’s prices. In addition, Boeing will get a $700 million tax benefit, which will offset the cost of its $500 million cash contribution.

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“The company has been saddled with debt since buyout firms KKR and Bain Capital, together with real estate investment trust Vornado Realty took Toys “R” Us private for $6.6 billion in 2005.”

Toys ‘R’ Us Mulls Chapter 11 Bankruptcy Filing (R.)

Toys ‘R’ Us Inc could file for bankruptcy in the coming weeks as pressure from skittish suppliers intensifies, the Wall Street Journal reported on Friday, citing people familiar with the matter. The company and its restructuring advisers are considering filing for Chapter 11 protection in the U.S. Bankruptcy Court in Richmond, Virginia, according to the WSJ report. The privately-held toy retailer had previously said it was working with investment bank Lazard to help address its approximately $5 billion in debt, of which roughly $400 million comes due next year. The potential Chapter 11 filing could be a result of the company’s suppliers tightening trade terms, including holding back on shipments unless the toy retailer is able to make cash payments on delivery, the newspaper reported.

The move by Toys “R” Us to potentially file for bankruptcy comes at a time when more and more consumers increasingly make purchases from online retailers like Amazon.com and avoid visiting brick-and-mortar shops. There have been more than a dozen significant retail bankruptcies this year, but none for retailers as big as Toys “R” Us, which has more than 1,600 stores worldwide. Toys tapped restructuring attorneys from Kirkland & Ellis LLP, CNBC reported this month. The company has been saddled with debt since buyout firms KKR and Bain Capital, together with real estate investment trust Vornado Realty took Toys “R” Us private for $6.6 billion in 2005.

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Interesting take.

Bitcoin Needs To Be Worth $1,000,000 To Be A Legitimate Currency (MW)

Think bitcoin is in bubble territory? You ain’t seen nothing yet, says one cryptocurrency expert, who believes its value needs to surge by about 300 times over the next several years to be considered a legitimate currency or risk retreating into obscurity and obsolescence. Bitcoin, the No. 1 cryptocurrency, has drawn outsize attention over its parabolic rise—and the recent, brutal plunge it has been enduring in recent trade. Some market participants, however, make the case that despite its roughly 260% year-to-date rise it has to clear a far more stratospheric value hurdle to evolve into a practical form of money alongside fiat units like the U.S. dollar, Europe’s euro or British pound. A single bitcoin was worth about $3,568 in recent trade, off lows of the past few days, according to data site Coindesk.com, amid regulatory headwinds in China and critical comments from Wall Street pros like J.P. Morgan CEO Jamie Dimon.

Still, a bitcoin would need to be worth a stunning $1,000,000 to be a bona fide monetary unit, says Iqbal Gandham, U.K managing director at eToro, a trading platform. In other words, the digital currency would need to see a 300 fold run-up from its current level. To be sure, Gandham isn’t making a prediction; though he believes the currency has the ability to scale such lofty levels, Gandham thinks that bitcoin needs to climb to such a level to be truly viable as a monetary unit. To understand why is to understand the tiniest component of bitcoin—the Satoshi. Named after the purported creator of bitcoin, Satoshi Nakamoto. A Satoshi is equal to 0.00000001 bitcoin. Put another way, one bitcoin contains 100 million Satoshis. Satoshi’s value in dollars equated to $0.0000356819 at last check. Gandham argues that a Satoshi needs to be equivalent to a single penny, which it would when one bitcoin is worth $1,000,000.

“It is the Satoshi with which people will buy a cup of coffee,” Gandham told MarketWatch. He said using bitcoin now to purchase goods and services, as one would with dollars, isn’t feasible because bitcoin hasn’t reached the necessary economies of scale. “People don’t use a bar of gold to buy things, they use subdivisions of gold,” he said, saying that using bitcoin now to purchase items is like using a bar of gold to purchase a beverage or a meal. Gandham also said bitcoin really needs to get to that million-dollar mark in the next few years. Some are already wagering that it will get close: John McAfee, founder of his namesake antivirus software company says bitcoin is headed to the $500,000 level within three years. “It needs to get there in the next few years if it is really going to work,” Gandham said. “People will only spend the subdivision of bitcoin—and you can only spend the subdivision—if they are of reasonable value,” he said.


An actual Satoshi note that is redeemable for real money

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“After 25 years of writing about her, my very last words on Hillary Clinton. Please shoot me if I violate this pledge..” Me too, this is it.

Hillary Happened (Jeffrey St. Clair)

Unlike Bill, Hillary is a prolific, but graceless and transparent liar. She is also probably the nastiest political figure in America since Nixon. Yet she lacked Nixon’s Machiavellian genius for political manipulation. Hillary wears her menace on her face. She could never hide her aspiration for power; her desire to become a war criminal in the ranks of her mentor Henry Kissinger (symbolized by the laurels of a Nobel Peace Prize, naturally). Americans don’t mind politicians with a lust to spill blood, but they prefer them not to advertise it. Thus, Clinton was miscast from the beginning as a political candidate for elected office. Her skills and temperament were more suited to the role of political enforcer in the mode of Thomas Cromwell or John Erhlichman. But her ambition wouldn’t let her settle for the role of a backstage player.

“One thing I’ve learned over the years is how easy it is for some people to say horrible things about me when I’m not around,” she fumes with Nixonian fury, “but how hard it is for them to look me in the eye and say it to my face.” Hillary has tried to reinvent herself many times and does so yet again in this meretricious coda to her failed campaign. She made herself more domesticated for the southern electorate in Arkansas. She shifted the blame to her advisors after the disaster of her health care bill. She washed off the blood-spatter from the Ken Starr investigations by portraying herself as the target of a witch hunt. She exploited an addled Daniel Patrick Moynihan to justify running as an interloper for Senator in New York. She rationalized her votes for the Iraq War by saying she was duped by Colin Powell and Dick Cheney.

She manufactured a timely tear for the cameras after her loss to Obama. She assumed the mantle of unrepentant war-monger during her belligerent tenure as Secretary of State and transubstantiated into a white dove during her debates with Bernie Sanders. She has weeded and blurred inconvenient episodes from her resumé. She has gone on talking tours. She has appeared in town halls. She has reintroduced herself, again and again. She’s changed her name, hairstyles and fashion designers. She exchanged dresses for pantsuits. She shifted from drinking pinot noir to craft beers. She’s backed wars both before she opposed them and after she condemned them. But she remains the same Hillary Rodham Clinton Americans have known since 1992. Everybody sees this except her. Americans know Hillary better than she does herself.

All of her manufactured mirages are translucent to the very the people she wants to deceive. When Hillary looks in the mirror, she must see what might have been (should have been in her mind) and not what is. And that schism enrages her. “Why am I seen as such a divisive figure and, say, Joe Biden and John Kerry aren’t?” she mopes. “They’ve cast votes of all kinds, including some they regret, just like me? What makes me such a lightning rod for fury? I’m really asking. I’m at a loss.” This self-pitying book should prove a challenge for library cataloguers. Shall they shelve it as non-fiction or fiction?

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“..only Trump could cut a bipartisan deal protecting immigrant Dreamers, and maybe Trump is the only president who could cut a bipartisan deal on Medicare for All..”

Trump And The Democrats: What’s Next: A Deal With Bernie? (Salon)

Meanwhile, it seems as though Trump has determined that he can cut deals with the congressional Democrats without any blowback — it’s the old “I could stand in the middle of Fifth Avenue and shoot somebody” canard. He believes he’s invincible when it comes to the loyalty of his googly-eyed rally crowds. And he might be right. The same goes for Trump’s seemingly unwavering support among the congressional GOP, given how various Republicans have distanced themselves from him publicly only to vote for him last November or to vote with him on the Hill. If Trump is right and his base is stronger than we think, perhaps there’s a chance for the president to pull another Nixon-to-China maneuver.

Rewinding 45 years, Richard Nixon, with his notorious record of anti-communism, was perhaps the only living politician who could’ve reached out to Chinese leader Mao Zedong in 1972 without serious political repercussions. A Democrat or liberal Republican reaching out to China would’ve been pegged as soft on communism, but Nixon was pretty well immune from such an attack. Likewise, only Trump could cut a bipartisan deal protecting immigrant Dreamers, and maybe Trump is the only president who could cut a bipartisan deal on Medicare for All, especially now that fellow populist Bernie Sanders has introduced it in the Senate with the support of 15 other Democrats, including Al Franken and Elizabeth Warren.

Back in 2008, President Obama internally toyed with the idea, but moderate Democrats as well as Republicans would’ve balked, so Obama instead went with the framework for the Affordable Care Act, given its support among moderates on the Hill. If Trump were to back Sanders’ legislation, it’d be difficult for Republicans and moderates to walk away, knowing the loudness of Trump’s base. As with many legislative initiatives and issues, Republican voters tend to run away from anything that’s proposed by liberals and Democrats simply because liberals and Democrats, in their worldview, are weak and can’t be trusted. With a Republican president backing Medicare for All, GOP voters might be more inclined to support it. Politics aside, they’d absolutely benefit from such a program and its considerable savings over private health insurance.

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OODA loop (observe, orient, decide, act).

The OODA Loop Of Trump’s Insurgency Has Been Smashed (GG)

Trump is in the White House today because an open source insurgency put him there. I first wrote about Trump’s open source insurgency a year and a half ago (February 2016). At that point, it was already apparent Trump was very likely to win not just the primary, but the election. However, as prescient as my article was, I did get the plausible promise – the simple goal the effort that unites all of the disparate interests, the goal that animates an insurgency – wrong. At the time, I thought it was about representing forgotten interests (an error many writers are still making). Instead, the real uniting goal of Trump’s insurgency was “opposition to a failed establishment” That goal held the insurgency that put him in office together, despite gaffes, scandals, leaks, etc that would have ended the political career of any other candidate.

It was also a goal that allowed the insurgency to continue after winning the election. In most cases, once the goal has been accomplished (i.e. remove Mubarak), the insurgency evaporates. The reason it didn’t: the media. The media is the voice of establishment interests (social, economic, and national security). It locks establishment interests in place. It also explained away failure after failure (nutty Chinese trade policy, lie that led to Iraq war, unpunished financial crisis, etc.) of the US establishment, as if it never occurred. The media kept the insurgency alive through its overwhelming opposition to the Trump Presidency and Trump helped keep it alive by provoking the media at every turn. The alignment of this very public struggle with the plausible promise of the insurgency kept Trump’s support at about ~40% (and more than 50% in more than half of all Congressional districts nationally).

That insurgency is now over. Its OODA loop is smashed. Worried that Trump would end existing US spending/policies (largely, still geared to cold war priorities), the senior military staff running the Trump administration launched a counter-insurgency against the insurgency. They have been successful (if only they were half as good fighting against real world insurgencies). Here’s how: Former generals took control of key staff positions. They purged staff members that were part of the insurgency and tightly limited access to Trump. Finally, and most importantly, they took control of Trump’s information flow. That final step changed everything. General Kelly, Trump’s Chief of Staff, has put Trump on a establishment-only media diet. Further, staff members are now prevented from sneaking him stories from unapproved sources during the day (stories that might get him riled up and off the establishment message).

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Making things ‘personal’ works for a narrative. In practice, though, not so much.

A Flaw In US Foreign Policy That No One Wants To Talk About (TAM)

In an interview with RT in 2015, Syrian President Bashar al-Assad uttered perhaps one of his most intriguing statements since the Syrian conflict erupted in 2011. Assad stated: “Western propaganda has, from the very beginning, been about the cause of the problem being the president. Why? Because they want to portray the whole problem in Syria lies in one individual; and consequently the natural reaction for many people is that, if the problem lies in one individual, that individual should not be more important than the entire homeland. So let that individual go and things will be alright. That’s how they oversimplify things in the West.” He continued: “Notice what happened in the Western media since the coup in Ukraine. What happened? President Putin was transformed from a friend of the West to a foe and, yet again, he was characterized as a tsar…

This is Western propaganda. They say that if the president went things will get better.” Putting aside Assad’s vast and extensive list of war crimes and crimes against humanity, Assad highlighted one of the major flaws in Western thinking regarding America’s hostile policies toward a number of independent states. Just look at the current to-and-fro-ing between North Korea and the United States to gather an accurate picture of what is being referred to here. The problem of North Korea is consistently portrayed in the media as caused by one person (current leader Kim Jong-un), a narrative that ultimately ignores the role America and its allies have played in this current crisis.[..] What the media is really advancing here – particularly when one talks about a military option as a response to dealing with North Korea’s rogue actions – is the notion that if the U.S. could only take out Kim Jong-un, the problem of North Korea would disappear.

[..] The fact that the U.S. evidently doesn’t want to solve any problems at all – that it merely seeks to overthrow leaders that don’t succumb to its wishes – is a topic for a separate article but is certainly worth mentioning here as well. The same can ultimately be said of Donald Trump. Since his election victory, many celebrities, media pundits, and members of the intelligence community have sought to unseat and discredit him. Yet Donald Trump is merely a horrifying symptom of America’s problems; to think he alone caused them and that by removing him from office the U.S. would suddenly become a safe-haven of freedom and liberty is nothing short of idiotic.

If you agree with the latter sentiment, you must also concede that the problems facing North Korea, Syria, Venezuela, and elsewhere could never be solved by the U.S. forcibly removing their leaders. If Assad was removed from Syria, would extremism disappear or would it thrive in the political vacuum as it did in Iraq? Could Syria’s internal issues — which are much more extensive than the corporate media would have us believe — be solved by something as simple as removing its current leader? Can anyone name a country where this has been tried and tested as a true model for solving a sovereign nation’s internal crises? Anyone who truly believes a country’s problems can be solved in this facile way needs to do a bit more reading.

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Congress has left a lot of things alone that are their responsibility

This Isn’t Your Great-Grandad’s America (Jim Kunstler)

Hurricanes Harvey and Irma are so out of the news now that people not listening to the mold grow in their sweltering bedrooms probably think these events had something to do with the Confederate defeat. Both The New York Times and the WashPo are much more concerned this morning with doings on the planet Saturn, and the career moves of fashion icon Chelsea Manning, which is perhaps how things should be in Attention Deficit Nation. Standing by on developments there…. In the meantime, personally, I think it would be cruel to deport fully acculturated and Americanized young adults to Mexico and Central America. But there should be no question that it’s up to congress to figure out what to do about the DACA kids, and put it into coherent law. The Golden Golem of Greatness was correct to serve the ball into congress’s court.

The suave and charming Mr. Obama only punted the action on that problem, and rather cynically too, I suspect, since he knew the next president would be stuck with it. It’s hard to overcome the sentimental demagoguery this quandary fetches up. The so-called Dreamers are lately portrayed in the media as a monoculture of spectacularly earnest high-achievers, all potential Harvard grads, and future Silicon Valley millionaires working tirelessly to add value to the US economy. This, again personally, I doubt , and there’s also room to doubt that they are uniformly acculturated and Americanized as claimed by the journalists cherry-picking their stories to support the narrative that national borders and immigration laws are themselves cruel anachronisms that need to be opposed.

[..] It’s right and proper that congress should resolve the fate of the DACA kids by legislation, and that they should actively address reform of the 1965 immigration act, too. Things have changed. This isn’t your great-grandad’s America of burgeoning factories beckoning to the downtrodden abroad. This is a sunset industrial economy not really knowing where its headed, but indulging in grandiose fantasies of perpetual robotic leisure where actual work is obsolete but somehow everybody gets rich. Trump was also correct to set a six month deadline on for congress to act. It is clearly their responsibility to do so, and the deadline is exactly the sort of boundary in thought-and-act that this lazy-ass nation needs to begin accomplishing anything on its long and neglected to-do list of pressing issues.

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Where are the defenders of democracy? Where’s the EU?

Police In Catalonia Hunt For Hidden Ballot Boxes In Bid To Foil Referendum (R.)

Armed police in Spain have raided several print works and newspaper offices in Catalonia in recent days in a hunt for voting papers, ballot boxes and leaflets to be used in an Oct. 1 independence referendum which Madrid vehemently opposes. The searches, which have so far yielded nothing, are part of a concerted effort by the government to prevent the ballot from going ahead, amid fears that a vote to break away could trigger a political crisis even if Spain does not recognize the outcome. On Friday, the government passed measures to tighten control over the region’s spending to stop it using state cash to pay for the ballot, and earlier this week Madrid summoned over 700 Catalan mayors for questioning over their support for the vote. “They’ve lost the plot,” said Albert Batet, mayor of the town of Valls and one of those summoned for questioning.

“They are persecuting mayors, the press, printers. They are stretching the limits of democracy.” Catalonia’s president Carles Puigdemont, who faces criminal charges for organizing the referendum, says he has over 6,000 ballot boxes ready to deploy next month, but their whereabouts are a secret. Toni Castejon, spokesman for the Catalan police force union, said it was like finding a needle in a haystack. “Right now, we have no idea where they are,” he said. [..] For some supporters of the independence movement, the search for the ballot boxes and voting papers has become a symbol of what they see as state repression. Images of the Catalan police force – the Mossos d‘Esquadra – seizing what for many are symbols of democracy would be highly inflammatory, police say.

The Mossos report to the Catalan regional government and are highly regarded by Catalans, particularly after their handling of the Islamist militant attacks in the region in August that killed 16. But Spanish state prosecutors have ordered all police – including the Catalan force – to act. “What no one wants is the image of the Mossos taking away the ballot boxes,” said Castejon of the police union. “That would lead to a lot of anger and even civil unrest.”

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Then again, this fits in quite well with how Brussels treats democracy, votes, referendums.

Spanish State Poised To Seize Catalan Finances (BBC)

The Spanish government has given the regional government in Catalonia 48 hours to abandon “illegal” referendum plans or lose budgetary powers. Finance Minister Cristóbal Montoro said a mechanism had been approved for the state to take control of the autonomous region’s finances. Madrid is seeking to stop the Catalan government spending public money on its planned independence referendum. The Catalans are defying a court order to suspend the 1 October vote. Catalan President Carles Puigdemont launched his campaign for a “Yes” vote on Thursday night in the town of Tarragona, telling a rally at a former bullring: “Vote, and in so doing bring light to darkness that has lasted for too many years.” The crowd shouted back, “Independence”, “We will vote” and “We’re not afraid”, AFP news agency reports.

Spanish Prime Minister Mariano Rajoy was taking the unionist cause directly to Barcelona on Friday, addressing a meeting of his Popular Party in the Catalan capital. If the deadline is not met, the central government will take over the funding of most essential public services in the region, Mr Montoro said. “These measures are to guarantee that not one euro will go toward financing illegal acts,” he was quoted as saying by Reuters news agency after a cabinet meeting in Madrid. The takeover would last as long as the “situation”, he explained. Public finances are a particularly sore point for Catalans who for years have contributed more to the state budget than they get back in spending on public services.

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Someone posted a similar cone for José on Twitter about ten days ago. The idea is not new.

New York City Is Within Hurricane Jose’s 5-Day “Cone Of Uncertainty” (ZH)

In what were perhaps the two biggest news stories of the past month, Hurricanes Irma and Harvey devastated the American south, disrupting local industry, destroying homes and critical infrastructure and dumping millions of gallons of raw sewage onto city streets – leading to the most destructive beginning to hurricane season in years. Meanwhile, cosmopolitan Yankees looked on in horror (with perhaps a touch of smugness) as they watched their southern neighbors being paddled out of flooded Texas homes by national guardsmen, or marooned in the seemingly endless lines of traffic snaking out of southern Florida, northeasterners now have their own storm to worry about.

And now, according to the National Weather Service, those same onlookers might be forced to endure similar hardships thanks to Hurricane Jose, already on its way to becoming a category one storm. Meteorologists at the National Hurricane Center say a wide stretch of the eastern and northeastern US, from Maryland up through Cape Cod, is within Jose’s five-day “cone of uncertainty” – meaning that a fully fledged hurricane could make landfall in or around New York City, potentially dealing another crushing blow to the city’s infrastructure after the city’s subway system has not yet finished repairing the damage from Superstorm Sandy, which took place five years ago.

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Jan 112017
 
 January 11, 2017  Posted by at 10:54 am Finance Tagged with: , , , , , , , , ,  5 Responses »
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Dorothea Lange Hoe culture in the South. Poor white, North Carolina 1936

Trump Said to Be Told of Unverified Russian Intelligence (BBG)
BuzzFeed Publishes Unsubstantiated Report On Trump (G.)
4Chan Claims To Have Fabricated Anti-Trump Report As A Hoax (ZH)
Michael Cohen: ‘It Is Fake News Meant to Malign Mr. Trump’ (Atlantic)
Tillerson To Face Questions On Russian Ties At Confirmation Hearing (R.)
Meryl Streep, Obama Prosecuted Whistleblowers & Bombed Weddings (Ryan)
Banks Forced To Cover Tracks Of China’s Forex Regulator (R.)
Boeing: 3 More Waves of Layoffs in 2017, Orders Collapse, Shares Rise (WS)
Euro May Not Exist In 10 Years, French Pres. Candidate Macron Says (CNBC)
Le Pen Says All French Banks Have Refused to Meet With Her (BBG)
Greek Severe Weather: Refugees Freeze, Aid Industry Fails (G.)

 

 

What an incredible story. What has the country turned into? What happened to verifying sources, stories? So strike out BuzzFeed as a news source. And John McCain. Any story that contains his name is fake.

Trump Said to Be Told of Unverified Russian Intelligence (BBG)

U.S. intelligence officials have informed President-elect Donald Trump about unsubstantiated reports they’ve received that the Russian government had compiled potentially damaging personal and financial information on him, a person familiar with the situation said. CNN reported earlier on Tuesday that as part of a briefing on Russian attempts to meddle in the presidential election, U.S. spy chiefs included a two-page summary of memos compiled by a former British intelligence operative about alleged Kremlin operations to gather prejudicial information on Trump and Democratic candidate Hillary Clinton. The FBI hasn’t been able to verify the information in the documents, CNN said.

BuzzFeed later published the entire 35-page compilation of memos, which contain potentially damaging but uncorroborated information about Trump and his associates. The person confirmed that the document was the same as the material in the government’s possession. The aim of the alleged Russian government intelligence-gathering was to leverage the information to shift U.S. policy toward Russia, including by potentially blackmailing Trump, according to the memos. President Barack Obama also was briefed on the documents. Trump denounced “FAKE NEWS – A TOTAL POLITICAL WITCH HUNT!” on Twitter at about 8:20 p.m. in New York, without mentioning or linking to any of the reports.

He retweeted a Trump Organization official, Executive Vice President Michael Cohen, who tweeted that “I have never been to Prague in my life” with a picture of the front of his passport. One of the memos alleged that Cohen had met with “Kremlin officials” in Prague in August 2016. Trump then tweeted an article by Lifezette, a website run by conservative radio host Laura Ingraham, that was critical of the BuzzFeed report.

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BuzzFeed is like WaPo. Done. No credibility. Cheap clickbait chasing.

BuzzFeed Publishes Unsubstantiated Report On Trump (G.)

BuzzFeed’s decision to publish an intelligence report filled with salacious and unsubstantiated claims about Donald Trump’s purported behaviour in Russia has triggered a political storm and debate over media ethics. The news website posted the unredacted documents on Tuesday, just 10 days before Trump’s inauguration, with a warning that the contents contained errors and were “unverified and potentially unverifiable”. The decision to put the claims in the public domain forced other media outlets to repeat the allegations or ignore a story that lit up the internet. Some critics rounded on BuzzFeed, calling it irresponsible. The documents, reportedly compiled by a British former intelligence agent, alleged that the Kremlin was “cultivating, supporting and assisting” Trump for at least five years.

They also alleged that Russian spies exploited the president-elect’s “personal obsessions and sexual perversion” to gather compromising material. The president-elect denied and denounced the claims in a series of tweets. “FAKE NEWS – A TOTAL POLITICAL WITCH HUNT.” The memos were compiled by the former intelligence officer on behalf of some of Trump’s Republican opponents in the primaries, and later by Democrats. Other media outlets including the Guardian obtained and reviewed the documents in recent weeks but declined to publish because there was no way to independently verify them. The stakes rose on Tuesday when CNN reported that America’s intelligence chiefs gave Trump and Barack Obama a two-page summary of the reports last week. CNN and The Guardian also reported that Senator John McCain delivered a copy to FBI director James Comey last month, but withheld the documents’ most eye-opening details, citing lack of corroboration.

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This is what America has become. Not Trump’s doing.

4Chan Claims To Have Fabricated Anti-Trump Report As A Hoax (ZH)

In a story that is getting more surreal by the minute, a post on 4Chan now claims that the infamous “golden showers” scene in the unverified 35-page dossier, allegedly compiled by a British intelligence officer, was a hoax and fabricated by a member of the chatboard as “fanfiction”, then sent to Rick Wilson, who proceeded to send it to the CIA, which then put it in their official classified intelligence report on the election. Here is 4Chan’s explanation of how the story came to light:

And a summary posted on pastebin:

On january 10, Buzzfeed posted a story under the byline of Ken Bensinger, Mark Schoofs and Miriam elder titled “these reports Allege Trump Has Deep Ties To Russia” and posted a link to a document alleging, among other things, that russia has been cultivating trump for 5+ years, that trump has been in constant contact with the kremlin for information on his opponents, and perhaps most inflammatory, that there are many recorded instances of blackmail of trump in sexual misconduct. A prominent claim is that trump rented the presidential suite of the Ritz Carlton Hotel in moscow, where he knew that the Obamas had slept in; he them hired a number of prostitutes to perform a ‘golden shower’ (pissplay) on the bed and in the room. https://www.buzzfeed.com/kenbensinger/these-reports-allege-trump-has-dee…
https://assets.documentcloud.org/documents/3259984/Trump-Intelligence-Al…

Noted #nevertrump voice Rick Wilson later commented on twitter, stating that the report “gave a new meaning to Wikileaks” (https://twitter.com/TheRickWilson/status/818982395202379777) and that the report was the reason everybody was fighting so hard against the election of Trump. (https://twitter.com/TheRickWilson/status/818983514335047680)

The remarkable thing? It’s all fake. And not only fake; it’s a prank perpetuated by 4chan, on Rick Wilson himself. A post on 4chan on october 26 stated “mfw managed to convince CTR and certain (((journalists))) on Twitter there’ll be an October surprise on Trump this Friday” along with a picture of a smug face with a hash name. http://archive.4plebs.org/pol/thread/94704894/#94705224

on november 1, a person without a picture but is assumed to be the same person posted “So they took what I told Rick Wilson and added a Russian spy angle to it. They still believe it. Guys, they’re truly fucking desperate – there’s no remaining Trump scandal that’s credible.” https://archive.4plebs.org/pol/thread/95568919/#95571329

on january 10, moments after the story broke and began to gain traction on social media, a person with the same smug grin face, and the same hash title for the picture, stated “I didn’t think they’d take it so far.” http://boards.4chan.org/pol/thread/106514445#p106520376

This story has taken on something of a life of it’s own. Going through Rick Wilson’s twitter, you can find many different stories from the time that he had shown the story to a wide number of anti-trump news sources, trying to find a news organization that would actually publish the story. During that time period, he referred to it often as ‘the thing’, and often playing coy with followers on the content with the story with anybody who was not also a #Nevertrumper. Unconfirmed sources has people as high up as John McCain giving the story to FBI Director James Comey to attempt to verify the story. Given that Rick Wilson runs in Establishment circles, it is not an impossible scenario that long-serving senators are falling for what amounts to a 4chan troll trump supporter creating an ironic October Surprise out of wholecloth to punk a GOPe pundit who derogatorily referred to them as single men who masturbate to anime.

While this entire incident is laughable, and even more so if the 4Chan account is accurate, what makes it quite tragic, is that it is no longer possible to dismiss the “fake news” angle to an intelligence report. And if the CIA is compromised, what is left for “news outlets” like CNN and BuzzFeed, which were all too eager to run with the story without any attempt at verification?

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Maybe Cohen should sue BuzzFeed?

Michael Cohen: ‘It Is Fake News Meant to Malign Mr. Trump’ (Atlantic)

Donald Trump and his lawyer on Tuesday night denied allegations in an explosive, unverified dossier that describes a purported Russian operation to compromise Trump. Trump tweeted that the document, which was referred to in a CNN report and later published in full on BuzzFeed News, was “FAKE NEWS – A TOTAL POLITICAL WITCH HUNT!” Trump was reacting to allegations in a memo originating from research reportedly compiled by a former British intelligence officer that purports to show that the Russian government has compromising information on Trump. The document also makes specific claims about contacts between people working for Trump and Russian officials. It alleges that Michael Cohen, special counsel to Trump, was central to “the ongoing secret liaison relationship between the New York tycoon’s campaign and the Russian leadership,” and that he met secretly with Kremlin officials in Prague in August 2016.

Reached by telephone on Tuesday night, Cohen denied the dossier’s allegations. The story is “totally fake, totally inaccurate,” Cohen said. “I’m telling you emphatically that I’ve not been to Prague, I’ve never been to Czech [Republic], I’ve not been to Russia,” Cohen said. “The story is completely inaccurate, it is fake news meant to malign Mr. Trump.” Cohen said that during the time the report places him in Prague, he was actually with his son visiting USC and meeting with the baseball coach. A USC baseball source confirmed Tuesday night that Cohen and his son had visited USC on August 29th. Cohen said that he was in Los Angeles from the 23rd through the 29th of August, and that the rest of the month he was in New York. He said that his only trip to an EU country over the summer had been a vacation to Italy in July. Cohen also tweeted a photo of his passport: “I have never been to Prague in my life. #fakenews.” Trump retweeted Cohen’s tweet.

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They won’t get to Tillerson.

Tillerson To Face Questions On Russian Ties At Confirmation Hearing (R.)

President-elect Donald Trump’s pick for secretary of state, Rex Tillerson, faces tough questioning at his confirmation hearing on Wednesday over his ties to Russian President Vladimir Putin as both Democrats and Republicans worry about Moscow’s increasingly aggressive behavior. The central question facing Tillerson, 64, the former chairman of Exxon Mobil, is how effectively he can transform himself from a Big Oil “dealmaker” to being America’s top diplomat with little government experience. According to excerpts from his opening statement released before the hearing, Tillerson will say that Russia poses a danger and NATO allies are right to be alarmed at a resurgent Moscow. He will argue, however, that Russia’s resurgence happened in the “absence of American leadership” and will call for open and frank dialogue with Moscow.

“We must be clear-eyed about our relationship with Russia,” Tillerson will say. “Russia today poses a danger but it is not unpredictable in advancing its own interests,” according to the transcript of his remarks. “We need an open and frank dialogue with Russia regarding its ambitions, so that we know how to chart our own course,” he will say. He will also emphasize the need to destroy Islamic State, and will criticize China’s behavior in the South China Sea and call on Beijing to pressure North Korea. Tillerson’s confirmation hearing comes at a time of rising tensions with Russia over its role in the U.S. presidential election and an assessment by U.S. intelligence agencies that Russia was behind the hacks of political figures in an effort to help Trump win the Nov. 8 election. Moscow has denied the allegations. Tillerson opposed U.S. sanctions against Russia in 2014 over its annexation of Crimea from Ukraine because he thought they would be ineffective.

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There was a good take down from Piers Morgan of all people on the same topic.

Meryl Streep, Obama Prosecuted Whistleblowers & Bombed Weddings (Ryan)

Streep’s anti-Trump speech on Sunday night at the Golden Globes was a sublime performance. It was delivered with emotion and grace. A real tear-jerker for anyone worried about the oncoming era of Trump. And yet… it also stank. It reeked, in fact. Of pure, unadulterated hypocrisy. Because Streep, sadly, is that common breed of liberal Hollywood hypocrite. You know, the ones whose bleeding heart credentials are suddenly nowhere to be found when the occupant of the White House is a cool Democrat who’s besties with Beyonce. In her impassioned speech, Streep called on her peers and fans to join with her in donating to the Committee to Protect Journalists: “We need the principled press to hold power to account, to call them on the carpet for every outrage. That’s why our founders enshrined the press and its freedoms in our constitution,” she said.

She’s right, of course. But one wonders is Streep even aware, for instance, that the Obama administration has prosecuted more whistleblowers than all of his predecessors combined? It’s a tradition Trump is likely to continue, of course, but it’s rather strange that the issue never crossed her mind until now. And where was Streep – only suddenly concerned about how “violence incites violence” – when Obama was helping Saudi Arabia level Yemen, bombing funerals and wedding parties? Or when his “humanitarian intervention” in Libya went so disastrously wrong that it turned the country into a failed state, allowing the terrorist group ISIS to flourish? Or when the great uniter earned himself the nickname “The Drone King” as he expanded the US drone program and conducted ten times more strikes than George W. Bush? Also a tradition Trump will likely be only too happy to uphold.

Where was Streep as the Nobel Peace Prize winner bombed not one, two or three — but seven different countries? To be fair to Streep, she probably didn’t notice because the “principled press” didn’t seem to either. Funny thing about that too, since Streep and her friends are worried about Trump’s apparent disdain for foreigners: All of the countries bombed by the Obama administration were Muslim countries. And where was Streep when Obama’s administration was negotiating on behalf of Al Qaeda-linked “moderate” rebels in Syria? In fact, where were all the hypocrites in the room, as Obama spent 2016 dropping 26,171 bombs? Oh that’s right, they were partying in his house!

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“You must control your forex deficit, but you can’t say that SAFE is controlling capital outflows..”

Banks Forced To Cover Tracks Of China’s Forex Regulator (R.)

China’s forex regulator is telling banks to keep its instructions about curbing capital outflows secret and to ensure that research analysts keep any negative views about the yuan’s prospects to themselves, several bankers said. Both demands are seen as an attempt by the authorities to prevent alarm that could trigger further declines in the yuan, the bankers from local and foreign banks said. The yuan lost more than 6% against the dollar last year and is at eight-year lows, prompting a flurry of restrictive measures on capital outflows from the State Administration of Foreign Exchange (SAFE), including setting limits on banks’ currency volumes in some cities or provinces and requiring approval for ever smaller transactions.

SAFE, which is part of the People’s Bank of China, is insisting in oral instructions to dozens of banks that they don’t reveal its role in such restrictions, six bankers said, which was damaging their relationships with clients since they were unable to explain why they were turning away business. SAFE and the PBOC have yet to respond to requests for comment. SAFE’s reticence began at least as far back as August, when its Shanghai branch called at least 20 of the major foreign and domestic banks operating in the city to a meeting with the regional heads of several SAFE departments. A representative from an international bank attending the meeting said there were no written instructions, but a high-ranking SAFE official told them explicitly what was expected of them. “You must control your forex deficit, but you can’t say that SAFE is controlling capital outflows,” the official told the bankers.

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World trade is collapsing.

Boeing: 3 More Waves of Layoffs in 2017, Orders Collapse, Shares Rise (WS)

This is not the way to start your workday… to find this email from your boss in your inbox: “As we enter 2017, our plan calls for us to reduce our Engineering staff. I realize some of this news is unpleasant. But I wanted to respect your right to know what is occurring this year.” But that’s what happened on Tuesday at Boeing. Hammered by slowing aircraft sales and a declining order book, Boeing warned on Tuesday in an internal memo that it would conduct involuntary and voluntary layoffs of engineers in Washington state, southern California, and South Carolina, according to The Seattle Times. The memo did not mention the size of the staff cuts. The memo by John Hamilton, VP of engineering at Boeing Commercial Airplanes, summed the situation up this way: “We continue to operate in an environment characterized by fewer sales opportunities and tough competition.”

These staff cuts come on top of the cuts in 2016, when Boeing slashed its workforce in Washington state down by 9.3%. That’s 7,357 jobs. Business has been tough. In 2016, deliveries fell by 14 jets from a year ago, to 748. Net orders dropped 13% from an already rotten level in 2015, to just 668, down 53% from 2014. And the lowest level since 2010! Of these orders, 550 were for the 737 model. But Boeing only sold 58 Dreamliners, and analysts are speculating that it will need to cut production. And it only sold 17 of its twin-aisle long-range 777, its most profitable plane. In December, Boeing said it would slash production of the 777 by 40%. Order cancellations in 2016 jumped by 67% to 180 airplanes, another sign that airlines are getting increasingly cautious – and nervous.

Boeing had already given a foretaste of these job cuts on December 19, without going into specifics. It showed that it is slashing jobs faster and more aggressively than forecast in early 2016. The new CEO, Kevin McAllister, who’d succeeded Ray Conner in November, is getting his feet on the ground, so to speak. And Boeing shares hit an all-time high. [..] orders have plunged 53% in two years, order cancellations have soared, deliveries have dropped, production is getting cut, as wave after wave of layoffs sweep out engineers and productions worker – but no problem. In this wondrous era of ours, stocks can only go up no matter what. Boeing closed up on Tuesday, at $159.07 a share, just a buck shy of its all-time high in December:

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No kidding: “The dysfunctioning of the euro is of good use to Germany, I have to say..”

Euro May Not Exist In 10 Years, French Pres. Candidate Macron Says (CNBC)

The euro may not exist in 10 years’ time if Paris and Berlin fail to bolster the single currency union, French presidential candidate Emmanuel Macron said on Tuesday, adding the current system benefited Germany at the expense of weaker member states.Macron was economy minister under Socialist President Francois Hollande until he resigned last year to create his own political movement and stand as an independent candidate in this year’s presidential election.”The truth is that we must collectively recognise that the euro is incomplete and cannot last without major reforms,” Macron said in a speech at the Humboldt University in Berlin. Speaking in English, he added: “It has not provided Europe with full international sovereignty against the dollar on its rules. It has not provided Europe with a natural convergence between the different member states.”

France must implement labour market reforms and revamp its education system to revive growth, while Germany must accept that more investment instead of austerity can boost growth across the euro zone area, the centrist politician said. “The dysfunctioning of the euro is of good use to Germany, I have to say,” said Macron, adding that a lack of trust between France and Germany was blocking major reforms that would increase solidarity among the 19 members of the euro zone.”The euro is a weak Deutsche Mark,” said Macron. “The status quo is synonymous, in 10 years’ time, with the dismantling of the euro. “He proposed the creation of a euro zone budget to finance growth-oriented investments and to extend financial assistance to struggling member states.

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“It’s the banks who decide who can run and who can’t.”

Le Pen Says All French Banks Have Refused to Meet With Her (BBG)

National Front leader Marine Le Pen said French banks have refused to meet with her to discuss the possibility of financing her presidential campaign. All the other candidates have received funding from French banks, Le Pen said in an interview on France 2 television. “The fact that the banks won’t lend to us, playing a political role, poses a real problem for democracy,” she said. “It’s the banks who decide who can run and who can’t.” The leader of the anti-euro, anti-immigrant National Front said she is looking for foreign banks for financing.

In France public funds are provided to candidates for campaign expenses after presidential elections provided they win at least 5% of the vote. Typically candidates borrow during campaign with the idea of using public funds to repay the loans after the vote. Polls suggest Le Pen will win at least 20% of votes in the first round of the presidential election on April 23.

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Nobody puts the NGOs under fire? What about the EU? People will have to die first. And even then, all there is, is the aid industry that is obviously criminally dysfunctional.

Greek Severe Weather: Refugees Freeze, Aid Industry Fails (G.)

In northern Greece, where the deep freeze worsened at the weekend, the plight of refugees living in tents in abandoned industrial warehouses was further complicated by water and electricity cuts. NGOs attributed the chaos to the absence of a national response plan, saying despite warnings of bitterly cold weather the state had been woefully ill-prepared. But international organisations also said the shocking images highlighted Europe’s inhumane policies towards refugees and migrants. “What we are seeing on the islands is the manifestation of the way Europe is failing to provide dignity for some of the world’s most vulnerable,” said Panos Navrozidis, country director of the International Rescue Committee in Greece.

“It is imperative that people are moved off the Greek islands. The IRC warned of these life-threatening conditions months ago yet still now with this weather we face a life-or-death situation.” With resources stretched to breaking point in a nation itself dealing with economic and social crisis, the beleaguered government has appealed to other EU member states to expedite the process of taking in asylum seekers. Under an emergency relocation plan, agreed as part of the EU-Turkey deal, the 28-member bloc vowed to accept 63,302 refugees from Greece. To date only 7,280 have been relocated from the country, according to European commission data released this week.

Brawls between rival ethnic groups, attacks by far-right xenophobes, and frustration and uncertainty over what lies ahead have exacerbated tensions in camps. In September, thousands were forced to flee Moria after members of Greece’s neo-fascist Golden Dawn party set fire to the facility. In what it described as “an extremely urgent appeal”, the anti-racist group Keerfa said government-run installations in Athens, including a former military barracks at Malakasa, had to be closed immediately because hundreds of detainees, among them children, toddlers and disabled people were “literally freezing”.

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